“Fund tech, not crappy apps” (a rant)

Where pent up anger meets a keyboard, sometimes terrific rants follow. Dan Lyons, was obviously in an inspired, angry, ranty day when he wrote about all the hip startups that got seed funding that never should have gotten seed funding, and who now face a Series A “crunch” – meaning, as he explains:

You know all those hundreds of incredibly stupid startups that have been raising seed money in Silicon Valley despite the fact that the people running those startups have no experience doing anything, ever, and have no idea at all how to generate revenue (let alone profit) with their lousy ideas, because, in fact, there is no way to make money with their lousy ideas, because in fact their ideas are lousy? Well, nobody wants to give those dopes any more money. So now they’re going to go out of business. I know. Shocking.

And the dopey angel investors who wrote the checks for those startups are going to lose their money. Because they can’t foist their bad investments onto the venture capitalists who occupy the next rung up on the food chain. Believe it or not this is actually a big story in Silicon Valley right now. People are writing about this phenomenon as if it is a surprising turn of events.

It also has some terrific insults towards bloggers (that would be us), too, so I urge you to read it. Of course, in Europe we’ve ALWAYS had a Series A crunch (and Series B, C, D to Z funding gaps) and a lack of seed funding, so maybe this crunch will actually just level the playing field. Or Europe will completely flatline, that’s a possibility too.

Fund tech, not apps

Lyons does make a good point when he says that it’s high time that tech startups are about technology again, and not apps.

The great lie of these last few years is that anyone can be a tech entrepreneur. You don’t need to know electrical engineering or computer science. You don’t need to know anything about business. You just need a positive outlook and an ability to speak confidently while saying things that make little or no sense.

What really offends me is that smart young people have been conned into thinking that starting a company is akin to buying a lottery ticket or rolling dice at Las Vegas — the odds are long but you never know, you might get lucky and strike it rich. So make something up, throw it out there, and see what hapens.

Meanwhile our country is facing a crisis because we have a shortage of students in STEM — science, technology, engineering and math. Every big company in Silicon Valley is starved for talent. And there is an entire generation of young people who, instead of studying those hard subjects, would rather slap together the fourteenth version of a peeer-to-peer car sharing service or alternative taxi service. Because it’s easy and you might get rich quick.

So maybe now all those people who have been playing “entrepreneur” will go get actual jobs making actual products and gain some actual experience. Maybe they’ll go back to university and study medicine, or engineering. Maybe they will realize that not everyone should be an entrepreneur – the Valley produces maybe 10 good companies a year – and that being an employee at a good company adds value too.